Rascal Corporation bonds have a 11.0% coupon and a maturity value of $1,000. The bonds, which pay interest semi-annually, had a maturity of 15 years. If you require a pre-tax return of 8.0% on bonds with this risk, how much would you pay for one of these bonds after 4 years?

Rascal Corporation bonds have a 11.0% coupon and a maturity value of $1,000. The bonds, which pay interest semi-annually, had a maturity of 15 years. If you require a pre-tax return of 8.0% on bonds with this risk, how much would you pay for one of these bonds after 4 years?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 16P

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Question

Rascal Corporation bonds have a 11.0% coupon and a maturity value of $1,000. The
bonds, which pay interest semi - annually, had a maturity of 15 years. If you require a
pre- tax return of 8.0% on bonds with this risk, how much would you pay for one of
these bonds after 4 years?

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